Is the National Procurement Service delivering for Wales?

Although spend through the National Procurement Service (NPS) is increasing, it has not developed as quickly as expected resulting in concerns over its funding and less than anticipated savings

Public bodies spent £234 million through the NPS in 2016-17, but this was well short of previous estimates, a report by the Auditor General for Wales has said.

Although spend through its procurement arrangements has increased year-on-year since its inception in 2013, public bodies are not using the NPS as much as anticipated. Of the £234 million spent through NPS in 2016-17, the 73 member organisations spent £222 million. NPS’s 2015 business plan had targeted a figure of £2.2 billion.

Until the end of 2015-16, a £5.9 million Welsh Government ‘Invest-to Save’ loan covered most of NPS’s operating costs. The Welsh Government expected that NPS would then start repaying the loan from surplus income generated by a supplier rebate. However, the rebate generated only £0.9 million in 2016-17 compared with operating costs of £2.8 million. Although there are signs of income increasing in 2017-18, NPS is still not expecting to cover its costs. The Welsh Government has used its reserves to meet the shortfall.

As at August 2017, NPS has reported savings for public bodies of £14.8 million for 2016-17 as well as wider benefits to the economy such as job creation and direct spend with Welsh suppliers. While the reported savings have increased year-on-year, the figures have been substantially lower than some early estimates.

The report also found that some public bodies have been concerned that the NPS is not sufficiently independent from the Welsh Government and that its focus is towards national issues rather than local priorities.

The report makes five recommendations on issues including:

identifying why public bodies are not using NPS as much as anticipated;

clarifying the process for members opting-out of using NPS procurement arrangements; and

agreeing a sustainable funding mechanism for the NPS.

Huw Vaughan Thomas said today “There is still broad in-principle support for the NPS, but it is vital that public bodies have confidence in it and it is clear that previous expectations about the growth of the NPS are a long way from being met. The NPS needs to do more to identify and address the reasons why public bodies choose not to use its procurement arrangements and to convince public bodies of the benefits.”